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VA electronic claims system melts backlog, but costs alarm Congress

A claims assistant files veterans cases into enormous rows of filing cabinets at the U.S. Department of Veterans Affairs in Los Angeles on December 5, 2012. Rick Loomis/Los Angeles Times/MCT

VA electronic claims system melts backlog, but costs alarm Congress

by: Tom Philpott | .

Stars and Stripes | .

published: February 01, 2016

Over the past five years, since Republicans won back control of the House, the Department of Veteran Affairs has been flogged publicly many times, often for allowing a mountain of backlogged disability compensation claims.

As the backlog fell, lawmakers now are learning, they should have paid more attention to how much VA was spending on its primary tool for the task — a paperless claim system. They’re paying attention now.

The cost of VA’s electronic claims network, called the Veterans Benefits Management System (VBMS), is $1 billion so far and soon will reach $1.3 billion, VA conceded this month to the House Veterans’ Affairs Committee.

That’s more than double VA’s original estimate of $580 million for VBMS in 2009. Costs are continuing to grow too because, by design, VBMS gets a software upgrade every three months. And apart from quarterly upgrades, VA plans for major innovations to the VBMS starting in 2018.

Rep. Jeff Miller, R-Fla., said he called this month’s hearing to focus on “yet another VA project that is over budget and underachieving.”

Amid the waves of criticism that followed, including testimony on results of troublesome audits by VA’s Office of Inspector General and the Government Accountability Office, doubts surfaced as to what impact the VBMS alone might have had on the backlog melt.

A VA claim is said to be in backlog status if awaiting a decision beyond 125 days of being filed. The size of the backlog peaked in March 2013 at 611,000. It stands today between 75,000 and 80,000, said Beth McCoy, VA’s deputy undersecretary for field operations. She credited the decline in large part to the increasing effectiveness of the VBMS.

Miller complained that the backlog wasn’t eliminated by 2015 as VA had vowed it would be. And both Miller and Brent Arronte, deputy assistant inspector general for VA audits and evaluations, questioned how much credit VBMS deserves for the backlog’s sharp decline.

Miller noted that the Veterans Benefits Administration also had hired 7,300 more full-time employees from 2007 to 2014. Arronte said VBA spent a combined $255 million on mandatory overtime to work the backlog, and VA implemented a fully developed claims process to shorten processing times.

Whatever VBMS contributed to the backlog’s decline, Arronte said, its costs “continue to spiral upward and final end state costs remain unknown.” Consequently, VA cannot be sure if its paperless claims system is providing “an effective return on its investment,” he said.

Cost overruns, Miller said, “would be bad enough but, after six years in development, VBMS is still not able to fully support disability claims and pension applications.” And for claim decisions on appeal, he said, VBMS “only acts as a document repository.” So even as the backlog of original claims has fallen, Miller said, the number of claims awaiting appeal decisions jumped 70 percent the past three years to 433,000.

In VA’s defense, McCoy and Dawn Bontempo, director of the Veterans Benefits Management System Program Management Office, suggested lawmakers are wrong to label VBMS spending increases as cost overruns.

“Scope and cost increases were planned, essential and approved to move beyond just an initial electronic repository functionality,” McCoy said.

To better serve veterans as well as veteran service organizations and VA claim processors, VA steadily is increasing “automation functionality,” McCoy said. “That’s something we will probably never finish.”

The VBMS, added Bontempo, was never meant to be a project where all requirements are defined upfront, a system is built to meet them, and “years later you have something delivered that may not be meeting your user needs. That’s a traditional IT project; we did not go down that path.”

The VBMS design, she said, “allowed us to build requirements as we were going along.” So the system has benefited from “seventeen major software releases and 56 minor releases in just four years,” McCoy said.

As VBMS tools and processes improve, as more files are scanned into the system, VA can better serve veterans seeking compensation, she said.

However, recent audits and feedback from VBMS users suggest a system plagued by weaknesses and defects. Though 95 percent of records related to veterans’ disability claims are now electronic and reside in VBMS, the system still can’t fully support disability and pension claims, GAO said.

Many of the software releases touted by VA, it added, contained defects “that reduce system functionality” and “adversely affect users’ ability to process disability claims in an efficient manner.”

The American Legion, in a written statement to the committee, complained that its claim assistance officers and the veterans they help are frustrated often by improperly identified scanned documents and VBMS’ lack of file search capabilities. As a result, the VBMS “offers little to no improvement over manually searching though paper files, with perhaps additional eye strain from staring at monitors,” the Legion advised.

GAO reported that VA “has not yet produced a plan that identifies when the system will be completed” or a reliable estimate of cost to complete. That limited view for managers and other stakeholders risks the VBMS “not having sufficient funding to complete development,” GAO said.

Miller tried to make the case that paperless claims were resulting in decisions of lesser quality, which accounted for a ballooning of claims on appeal. McCoy disputed that, arguing that overall claim accuracy scores had climbed from 83 percent in 2011 to 91 percent last year.

“Veterans are much better off because of the electronic system,” McCoy said. “We were outdated [and] should have done this years ago.”

Miller said VA still must be held to account for unbridled spending.

“It can’t be pouring in more and more and more money without any cost controls. I think that’s what the committee needs to focus on,” he said.